What Do Auto Insurance Liability Coverage Limits Mean?

Consumers who are looking for auto insurance liability coverage need to understand what they are buying and how this type of coverage works. Auto insurance liability coverage is required by law in most parts of the United States, and it is used to pay for damages the policyholder is responsible for causing in an at-fault accident. It pays for personal injury and property damage claims made by the occupants of the other vehicle in a motor vehicle accident.

Liability insurance can be expressed as a series of three numbers. The first number in the set refers to the policy limit in place to pay for injuries sustained by a single accident victim. The second number is used to express the level of coverage in place to compensate two or more people injured in the same accident. The third number in the expression indicates the level of property damage liability protection that the policyholder has in place.

Uninsured and underinsured motorist coverage may also be required in certain states. Uninsured motorist coverage pays for injuries and damages incurred by the policyholder and the occupants of his or her vehicle when the at-fault driver in an accident does not have insurance. Underinsured motorist protection is used to top up the at-fault driver’s coverage when the policy limit is not high enough to pay for the damages caused in an accident.